The Options Trade for Bulls and Bears

Trading patterns show investors are becoming cautious. Here's how to protect against losses while profiting from gains.

Warren Buffett famously advised investors to buy fear and sell greed. In the current market, options traders can do both.

Despite the bullish trend pushing indexes higher, fear is still evident in the market. Investors are looking to March 1, the federal government's sequestration deadline, when $1 trillion is stripped from the federal budget; that could upset the delicate economic recovery. Europe's ongoing economic malaise also...